Bridge loan terms have improved significantly during the past three months, attributable to the efficiency of commercial real estate Collateralized Loan Obligations (CLOs) issuance and strong investor demand for CLOs. The most competitively priced bridge loans today end up in CLOs. Pricing for bridge loans are now 250-350 basis points (bp) over the 30-day Libor rate. With the Libor rate at approximately 2.40%, rates to borrower range from 4.90%-5.90%. The rate is floating and is interest-only.
In addition, loan term is lengthening. The typical bridge loan term was 24 months with a 12-month extension option. Today, a loan term of up to 60 months is available, providing more breathing room before maturity. Loan fees are declining as well. Lender origination fees that were typically 1% are now 0.5% of the loan amount. Exit fee are disappearing as well.
Many of the bridge loans that ValueXpress originates end up in CRE-CLOs. Bridge loans are conventional primarily floating-rate first mortgage loans secured by unstabilized income-producing commercial real estate properties that have vacant or underutilized space that is being marketed to tenants. Often these properties need to undergo complete exterior or interior capital improvements to attract new tenants. Bridge loans often provide the capital for exterior or interior capital improvements, tenant improvements, leasing commissions and an interest reserve (if required).
If you want a floating rate bridge loan, contact Mike Sneden at email@example.com, Dennis Suh at firstname.lastname@example.org, or Gary Unkel at email@example.com for a no-obligation quote.